An introduction to community development : a guidebook for local leaders

MONTANA
STATE

This "cover" page added by the Internet Archive for formatting purposes

I{^^

AN INTRODUCTION TO COMMUNITY DEVELOPMENT
A GUIDEBOOK FOR LOCAL LEADERS

Lawrence^Gallagher , Consultant

and

The Montana Department of Commerce

STATE DOCUMENTS COLLECTION

AUGl 1989

MONTANA STATE LIBRAR/

1515 E. 6th AVE.
HELENA, MONTANA 59620

PLEASE RETURN

Published by the Development Bureau of the

Montana Department of Commerce

Helena, Montana

December 1982

TABLE OF CONTENTS

Chap ter

Title

Page Number

Foreward 1-2

1 What is total community development? 3-6

2 The need for total community development.. 7-13

3 The reasons for a publ ic /private partner-
ship lA-17

A The role of state and federal government.. 18-20

5 How to organize for community development. 21-26

6 Developing a total community development

plan 27-35

7 How to finance community development 36-58

8 Land marketing and community promotion -
attracting private investment 59-61

9 Summary 62-63

Appendix (Includes bibliography and

other resources ) 64-

FOREWARD

"Provide local communities with the information and
technical assistance necessary to attract businesses
that will provide long term employment opportunities
for Montana citizens."

"Recognize the interdependent relationship between
community and economic development."

These were two of eight objectives established for the
new Department of Commerce by Governor Ted Schwinden when it
was created on July 1, 1981. The Department of Commerce is
an advocate of economic development consolidating four essential
functions of state government: regulation of business activity;
promotion of business; assistance to local governments in com-
munity development; and planning of transportation services.
The Department's purpose is summarized by the statement:
"We must take positive steps toward maintaining and
expanding existing Montana businesses and attracting
new light manufacturing and technologically base
businesses."

"Montana's economic future will be molded by sensible
nonrenewable resource development, retention and
expansion of our agricultural, tourism, timber and
manufacturing industries, and by creative and
dynamic development of new technologies. Success in
all of these areas will be measured at the community
level by increased business and employment opportunities."

1

Increased business and employment opportunities are achieved
by encouraging balanced, planned community growth. Total community
development can be achieved if the community's leaders will:

(1) accept the challenge to assess their community's
needs ;

(2) identify and analyze community resources;

(3) attempt to meet community needs by developing public/
private strategies based upon clearly stated, realistic,
and targeted objectives.

This guidebook suggests some reasons why community develop-
ment is necessary, discusses how to start the community develop-
ment process, and introduces some community development tools.
This guidebook is not intended to be all-inclusive nor does
it offer sophisticated solutions. It is intended to provide
community leaders with the basic information and methods which
may be employed to attain a growth that is desirable and in
tune with all basic human needs and the environmental quality
of our cities and towns and the State of Montana. The guidebook
recognizes that there is great diversity among Montana com-
munities. There are differences in community resources, objec-
tives, attitudes, administrative ability, organization. Thus
the guidebook will generalize suggesting that you modify or
mold the guidebook's ideas to meet your community's needs.
A bibliography of community development literature available
is part of this guidebook. After you do some basic community
development planning, you are encouraged to explore and develop
the necessary tools to meet your community development goals
and Ob j ec ti ves .

CHAPTER 1

WHAT IS TOTAL COMMUNITY DEVELOPMENT?

According to PRINCIPLES OF INDUSTRIAL DEVELOPMENT edited
by Richard Preston, there are three words basic to the considera-
tion of TOTAL COMMUNITY DEVELOPMENT. They are: GROWTH - DEVELOP-
MENT - COMMUNITY. Think of growth as a weed patch - wild,
uncontrolled and unpredictable or as a garden that is planned,
nutured and desired. Unplanned growth is a weed patch - care-
fully nutured, planned growth is a garden. Total community
development is achieved by planning and developing the balanced
growth of the city or town's social, economic, political and
natural environments - its total environment.

"Social Environment refers to housing, health education
welfare, employment, amenities, recreation, crime pre-
vention and such elements of the Community.

Economic Environment embraces human resources, capital
resources, natural resources, markets, transportation,
utilities and commerce.

Political Environment is composed of the governmental
structure of a community; the legislative, the executive
and the judicial branches. The government affects the
total environment through its mature development and
implementation of laws.

Natural (or Physical) Environment includes air, land,
water, and other natural resources which exist in a
community."

These four environments function together as a unit - a community

- whose overall goal is to preserve and enhance the quality

of life. Total community development must address concerns

about and attempt to interrelate the social environment, economic

environment, political environment, and the natural environment.

Taking these social, economic, political and natural environments

into consideration, total community development is committed

to preserving and enhancing the quality of community life

through :

(1) the generation of productive employment
opportunities ;

(2) the expansion of the economic base.

Therefore the effort must concern itself deeply with the
development of the total community, not simply with the develop-
ment of one or another element in the community. The consequen-
tial or lasting effect of Total Community Development involves
developing and sustaining the following:

a. A positive, collective community attitude toward
balanced growth which requires, in effect, that
all of the communities which make up the total
community understand that the development which is
being undertaken is development with environmental
quali ty .

b. A civic awareness that is representative of the
communities within the collective community;

c. A progressive and representative government organiza-
tion;

d. Housing plan for all income group levels - present
and future ;

e. Health facilities capable of serving a growing com-
munity and efficient "protective services": police,
f ire , etc.;

f. A broad gauged educational program which includes
vocational training and technical assistance;

A trained manpower reserve;

A realistic land use plan supported by realistic
zoning and building ordinances which reflect that
the community as a whole appreciates the need to
implement comprehensive planning by "development
with environmental quality";

Public utilities such as electricity, gas, water,
sewage, waste disposal, etc. which can meet both
present and projected demands;

Public services adequate to accommodate expansion
of residential, commercial, manufacturing and re-
creational facilities;

k . A transportation network commensurate with the
development goals;

1. A healthy business community that reflects public
appreciation of what private enterprise means to a
comrauni ty ;

m. A sense of responsibility toward the area and region
of which it is a part.

SUMMARY

"Total Community Development to succeed, requires that
many principles of industrial development be followed and adhered
to on a daily basis.

Three basic principles that encompass all others are:

A. The commmunity must strive to maintain and develop
its quality of life;

B. "Desirable growth" occurs when the total environmental
quality is made the goal of industrial development;
and ,

C. Total Community Development must become the standard
process for present and future industrial development.

A community that follows these general principles and

their specific procedures will be "successful" in developing

as a total community."

CHAPTER 2

THE NEED FOR TOTAL COMMUNITY DEVELOPMENT

The RANDOM HOUSE DICTIONARY defines need as: "a requirement,
necessary duty or obligation, or a lack of something wanted
or deemed necessary." The need for Total Community Development
has been a matter of State policy for decades and although
it has not been legislatively required it has been encouraged,
promoted and enhanced as a necessity in the public interest.
To better understand the need for Total Community Development
today we should examine how communities and economic development
has evolved since the last half of the nineteenth century.

Montana cities and towns evolved from a collection of
crude shacks, log cabins, and tents that housed the first hardy
pioneers, drawn from urban centers long established in the
east to this land rich in resources. It was the odd assortment
of gold seekers, cattlemen, lumbermen and farmers and those more
civilized and accustomed to urban comforts than the trappers of Jim
Bridger's era, that created the market which, in turn, attracted
the entrepreneur. s who would pioneer trade, merchandising and
manufacturing in exchange for the gold, which was abundant
in the new territory.

Mines, mills, smelters, grain elevators and the all-purpose
general store soon dotted the landscape and were connected
by ribbons of steel, as the railroads developed, replacing
the oxen-drawn freight wagons used to distribute goods brought
upriver by steamboat. The traders, manufacturers and merchants
were joined by attorneys, physicians, surveyors and other pro-
fessionals to round out a full complement of services that
were demanded and now provided for in the first Montana com-
mun ties .

Central to these emerging communities was the banking
industry which became the anchor tenant of the Main Streets,
Broadways, Central Avenues and Last Chance Gulches that were
at this early period the center of activity in Montana's urban
centers. Banks provided the loans necessary to continue the
expansion of local economies, introducing and reintroducing
the venture capital required by Montana's growing business
community. Banks channeled the fortunes of the mining magnates,
timber and cattle barons, and even the meager savings of the
laboring community back into expansion of the local economy,
which included permanent housing. The evolution of neighborhoods,
central business districts and industry thus were directly
tied to bank participation.

The territorial and eventually state government was estab-
lished, and towns elected mayors and councils. Volunteer and
private schools, once the only choice for education, were supple-
mented by public schools. Water systems, streets, lighting,
fire and police protection were provided, with municipal and
state government revenues derived from a tax on the land and
its improvements. Substantial portions of that revenue were
generated from the ad valorem tax on land and improvements
owned and occupied by business and industry. In fact, it is
safe to say, that without the tax contributions of business
and industry, Montana communities could not have afforded the
luxury of government services and public infrastructure.

A healthy tax base has always been synonymous with a healthy
base or primary industry, its derivative businesses and the

housing stock. Agriculture, timber or wood products, and mineral
resource extraction and processing are the primary base industries
in Montana. These base industries, to a large extent, have
always controlled the economic well-being of the state. It
is because of these base industries, that central business
districts and satellite buisnesses grew and prospered.

The secondary or derivative businesses, providing goods
and services, prospered or declined in direct proportion to
the economic well-being of Montana's base industries.

Base or primary industry in Montana is often controlled
by regional, national, or international financial /economic
factors beyond the control of the communities or the state.
Factors such as world markets, tight money, import or export
tariffs or duties can and do affect our base industries (and
communities which depend on them) often in a negative
way .

Montanans are aware of the relationship of base industry
and derivative jobs. We are reminded constantly that weather
is an important determinate of our economic well being. Our
history is replete with examples of how the free enterprise
system and the desires of en ter preneurs meshed to carve an
economic foothold in our rich environment. Communities matured,
the tax base grew, public services were provided and now over
one hundred years later, we are faced with some new opportunities
and problems .

The heart of every urban center from Plentywood to Hamilton,
from Billings to Missoula, is the central business district.
It may be two blocks long or encompass hundreds of acres.

10

It is the place of businesses, people and all manner of commercial

activity. Historically, the central business district served

as the financial, entertainment and retail center, the place

where parades were held and politicians gathered. Main street

businesses were the financial strength and building blocks

of the community because they provided the tax base, jobs,

and needed goods and services. The central business district

and surrounding neighborhoods, the economic strength of the

community, and the ability to provide local government services

were in turn tied to and directly dependent upon the strength

of the region's primary economic base— whether mining, timber

or agriculture. Because of this dependence, these base industries

had a pervasively powerful influence on the community and often

exercised tight control, as dominant forces are wont to do,

of local politics and community development.

Since World War II, particularly in the 1950's and 1960's,
world and, particularly, national external f inancial /economic
factors began to reduce the influence of major industry and
the importance of central business districts. Central business
districts were by now fully developed, i.e. occupied by buildings.
Age and functional obsolesence, however, had started to take
its toll. The city center was suffering from physical deterioration
and the subsequent weakening of its financial structure; although
there was concern it was often too little and too late.

The center of our communities, the central business district,
the tax base which provided significant tax revenues to build
our schools, libraries, civic buildings, public streets and

11

other infrastructure was in trouble, and the need existed to
help revive it and encourage its rebuilding through public/
private investment and reinvestment.

At the same time that the problems of the central business
district were developing and becoming acute, base industry
in Montana was also in a state of transition. Mining had become
highly mechanized and underground operations were abandoned
for less costly, less labor-intensive open pit mining. The
world market prices for gold and silver were not adequate to
support costly extraction and refining once the easily accessible
rich deposits were exhausted and air quality standards had
to be met. The world price for copper declined due to many
external factors. Agriculture, too, although still the state's
biggest industry, became less labor-intensive, through high
mechanization and the use of new farming and ranching techniques.
Marginal farms and ranches were bought up by larger operators
more capable of competing in what had become a capital-intensive
business. The national and world market places for agricultural
products were now more susceptible to forces beyond the control
of Montana farmers and ranchers. Mechanization, new building
materials, and other factors affected the woods products industry
and its ability to produce new jobs.

More and more the economic strength of this state is dependent
on new and expanded industry and economic diversification;
diversification to lessen our dependency on historical base
industries, but more importantly to provide new jobs, a healthy
tax base and to stimulate economic growth.

12

We should also examine the importance of tourism and travel
to our state. "The overall travel industry generates approximately
12,000 full and part time jobs and about 60 million dollars
in income. This makes tourism Montana's sixth largest basic,
income producing sector, well ahead of light manufacturing, ;.
primary metals, food products, and refining.

The need, then, to improve and redevelop our aging business
district, strengthen and diversity our economy and adopt balanced
growth policies is rooted in the history of this state. It
is simple pragmatism to demand solutions and seek answers which
balance, economic, social, political and environmental concerns.

Part of the solution is the formation of public/private
partnerships throughout Montana willing to address the problems
and accept this challenge. In the next chapter we will discuss
the concept and functioning of the publ ic /private partnership.

13

CHAPTER 3

THE REASONS FOR A PUBLIC /PRIVATE PARTNERSHIP

Industry and commerce in Montana communities has been
developed by the private sector. Why now does local and state
government need to get involved? The magnitude of the problem!

The existence of blight in our communities, the lack of
housing, or the failure to provide productive employment oppor-
tunities is mostly the result of the inability of one or several
investor-developers to deal with all of the problems found,
both public and private, and still realize a reasonable profit
on an investment. Although investor-developers are socially
conscious, community betterment is not their sole concern.
They face numerous problems in the provision of quality development.
Land may be difficult to assemble, too expensive, and zoned
wrong or not zoned at all, hampering its future development.
Buildings may need to be cleared, obsolete platting corrected,
utilities, streets and parking may be inadequate and the "character"
of the area may not be conducive to private development.

Local government is endowed with legal powers not delegated
to the private sector. It can coordinate total community develop-
ment programs and devote a variety of resources to encourage'
private investment; it can aid in project financing through
the use of special improvement districts; parking, sewer, and
water revenue bonds; industrial development revenue bonds;
and urban renewal tax increment bonds. Local government can
apply for and receive federal loans and grants to aid in project
financing, although these sources are becoming more and more
restricted. Through the use of statutorily authorized powers,
and these community development tools, local government can
provide incentives and act as the catalyst to encourage private

15

investment and reinvestment. Local government, however, cannot
exercise its powers without, unless, and until, the private
sector is ready, willing and able to do its part by "making
a consequential capital investment in the identified potentials
of the constituent areas."
BENEFITS TO THE PRIVATE SECTOR

Private business exists to make a profit by providing
goods and services or manufacturing products. The investor-
developer is interested in a profitable return on dollars
invested in a business. Investor-developers are also motivated
by opportunities to shelter regular income from income tax
through real estate investments or by investing in new or
expanded plant and equipment. Tax incentives have encouraged
the rehabilitation of historically significant buildings and
major new investment for industrial plant and equipment
modernization. Existing property owners, those who have already
invested in the community, have an opportunity through their
participation in total community development to protect their
inves tmen ts .

If a publ ic /private partnership is formed the private
sector can work collectively to solve problems beyond the capacity
of individual investor-developers and merchants. By working
with local government the private sector may be able to take
advantage of low interest loans, grants, and other incentives.
There are risks involved as with any investment; however, most
risks can be reduced through proper planning and the total
commitment of both local government and the business community.
Both the public section and the private sector have needs.

16

resources, and tools which need to be integrated in a public/
private partnership approach to community development.
BENEFITS TO THE PUBLIC SECTOR

The benefits to local government which elects to create
a publ ic / private parternship are an improved tax base, more ^
jobs, and a more livable environment for the citizens of a
community. As blight is eliminated, as the housing stock improves,
as the local economy improves, there is often a direct reduction
in the cost of providing city services. Utilities, streets,
parks, and other public improvements are (or can be) improved
with new tax revenues generated from development. Community
pride can be restored as the community becomes economically
viable and is restored to its pre-eminace as a center for trade,
jobs and culture. The economic well being of the State of
Montana is dependent upon the health and vitality of its in-
dividual cities and towns.

17

CHAPTER 4

THE ROLE OF STATE AND FEDERAL GOVERNMENT

The Montana Department of Commerce was created in July,
1981, by Governor Schwinden who established the following objec-
tives for the new department:

- Reduce the adversary relationship between the public
and private business sectors.

- Improve the state's business image.

- Develop and implement a unified state policy designed
to foster stable, diversified economic development in
Montana .

- Provide local communities with the information and
technical assistance necessary to attract businesses
that will provide long-term employment opportunities
for Montana citizens.

- Recognize the interdependent relationship between com-
munity and economic development.

- Remain informed of changing world and national economic
conditions and work to avert major industry shutdowns
in the state.

- Consolidate and streamline state business licensing
and regulatory functions.

- Integrate transportation planning with economic develop-
ment planning.

The creation of the Department of Commerce consolidated
four essential commerce functions of state government: regulation
of business activity; promotion of business; assistance to
local governments in community development; and regulation
and planning of transportation services. The Department of

19

Commerce will act as advocate, catalyst, provide technical
assistance, provide data and target limited state and federal
resources to promote and encourage Total Community Development.
It will actively solicit views and ideas from Montana's community
and business leaders as to programs it should develop, alter
or eliminate to better encourage and foster total community
development .

It is clear that the Federal Government will not provide
as many "tools" for local community development as in the past.
Community development must be more dependent on local and state
resources. Federal grant programs and technical assistance
budgets have been cut drastically. Still, there are federal
resources available: HUD Urban Development Action Grants,
FmHA Community Facility Loans, EPA Wastewater Grants, NFS Land
and Water Conservation Funds, etc. Communities should start
by using local resources. Federal and state resources should
supplement - not supplant - local resources.

20

CHAPTER 5

HOW TO ORGANIZE FOR COMMUNITY DEVELOPMENT

SHOULD YOUR COMMUNITY GET INVOLVED?

Not every Montana city or town needs the comprehensive
total community development approach to solve its problems.
State law contains many tools which may be employed to deal
with specific or scattered problems. Why develop a total com-
munity development plan and implement a comprehensive project
when perhaps a simple special improvement district or parking
revenue bond would do the job? Perhaps there are just a few
run down buildings and the rest comply with local codes and
standards. Why not exercise existing powers and enforce the
local building code? Perhaps there is only need for one store
or motel to expand, and land is available. Why not use an
industrial development revenue bond to finance land and improve-
ments? Perhaps public utilities are old and in need of repair
and/or replacement. Why not issue sewer and water revenue bonds
to finance the needed improvements? Total community development
is useful and necessary only when a combination of factors
contributing to "blight" exist and can be addressed by using
a combination of tools and powers.

Next, there must be evidence that that program will receive
community support. At minimum, it must be supported by elected
officials and the business community alike. Both must realize
that without this public/private partnership and commitment
to make the process work, it is doomed to failure. One of
the principal reasons for the failures of federally funded
programs is the failure to recognize and deal with this important
factor before federal funds are received. The fact that funds

22

are now generated locally will not in itself generate local
support. Everyone cannot be convinced that it is a worth-
while program, but attempts should be made to identify and
deal with, and overcome strong local objections.

If the need does exist, if a total community development
plan has been well thought out and developed on the basis of
your community's needs and objectives, if the private sector
has been involved in developing the plan and is willing to
participate, and if elected officials can declare that it is
necessary in the public interest that a total community develop-
ment plan be developed, then proceed.

Total Community Development may require a financial commit-
ment to get started. Seed money or front end money in the
form of either public and/or private revenue commitments can
be used to develop plans and conduct surveys of community at-
titudes and desires.

Who will bear the cost? Typically those who will benefit.
In Missoula, Great Falls and in Kalispell, businesses and
property owners generated a large portion of the initial revenues
needed through either assessments or private contributions.
These private funds were often matched or supplemented with
public dollars derived from parking revenues, revenue sharing
dollars, planning grants or Community Development Block Grants.
Regardless of the source of initial funding, both the public
and private sectors must realize that there will be a need
for continuing financial commitments. The city will be requested
to provide public improvements; it may be necessary to forego

23

improvements in other parts of the city. Planners, engineers,
and building officials may have increased workloads or even
find the need to hire additional staff. The city attorney
will have added responsibility, and elected officials will
have to devote more time, effort and study for review and
decision making .

For the plan to succeed the private sector may be asked
to pay for at least a portion of the cost for improvements
and other urban amenities. Property owners will be asked to
repair and improve their buildings if code violations exist,
although low interest loans may be available, thus reducing
their cost. Special Improvement Districts (SID) may be needed
and, finally, in ves tor /developers will have to make substantial
long term financial commitments for new or expanded businesses
for a total community development to succeed.

Despite the need for private investment^ total community
development projects frequently are carried out at no cost
to the general public. For example, governmental provisions
for public improvements in a community are oftentimes des-
perately needed, whether or not a plan is in existence. The
benefits of stabilizing or improving the tax base, the additional
jobs provided and a reduction in city services over the long
term should far outweigh any cost to the taxpayers.

Total Community Development will change a community and
where there is change, there is controversy. In many Montana
cities and towns, a change is long overdue. Total community
development can change the physical characteristics of a
community, hopefully improving them. But there are those who

2^

resist change and many who just don't care. It is hard for
the citizens of any town undertaking a project to remain in-
different and untouched by it, particularly those in smaller
communi ties .

Elected officials and other community leaders must realize
from the very beginning that if they do not agree with the
general principles of total community development and are not
willing to see the program through, they should not become
involved in adopting a total community development plan or
project. Dissension, lack of commitment and support or the
inability of a governing body to act and react quickly, will
frustrate staff and citizens, and destroy investor /developer
confidence in the area. Opposition will also find this kind
of atmosphere fertile ground to plant the seeds of doubt and
the eventual failure of the program.

Local community leaders need to understand and investigate
all aspects of total community development before a program
is initiated. Complete unanimity, although not necessary,
is desirable «

To summarize this section, before a community or the local

governing body decides to adopt total community development

plan and exercise the powers conferred by state law, these

questions should be answered. Will lesser measures work?

Is there a need for a comprehensive project? Will the private

sector respond? Will the public sector respond? Total community

development should be discouraged if:
1. objectives are not clear;

25

2. there is a serious doubt that the community has the
ability and level of sophistication needed to run
the program;

3. the community is not willing to hire competent staff
and/or professional help;

4. property owners in the area are quite satisfied
with things as they area;

5. the private sector is unwilling or financially
unable to rehabilitate or reinvest in the area;

6. market studies, community attitudes, lenders and
realtors, suggest an area has no drawing power,
strengths or a focal point to attract investment
or reinves tmen t ;

7. apathy prevails;

8. there is no system for building or development codes or
enforcement .

9. there is no replacement housing for persons or
families that may be displaced.

The need for a comprehensive plan and a land use plan
exists. Mentioned above is a need for codes and enforcement.
These and other essential elements were one requirement of
a "Workable Program", a prerequisite of federally funded cate-
gorical programs, but no longer required. The authors of THE
CITIZEN'S GUIDE TO URBAN RENEWAL aptly stated the philosophy
behind the workable program requirement:

To spend money for the elimination of blight in one
section of your community without taking steps to
prevent its reoccurence elsewhere is like trying to
fill up a bathtub with the plug pulled out.

By now you may have decided that total community develop-
ment is not the approach to take in your community*

If this is the case, please browse the remainder of this
guidebook. You may still find some useful potential solutions
to an individual community problem.

26

CHAPTER 6

DEVELOPING A TOTAL COMMUNITY DEVELOPMENT PLAN

Mindful of Daniel Burnham's advice to "Make no little
plans; they move not men's souls", community leaders need to
develop a plan that will spark and inspire developer- inves tor
interest and public acceptance by addressing obvious community
needs and objectives. The plan should suggest measureable
improvements, but should not be overly ambitious or unrealistic.
The plan should clearly establish the strategy to be used to
implement the plan and to attain the desired goals.

Total Community Development planning should begin with
a thorough description of the assets and liabilities of the
blighted areas. Retention of tangible qualities should be
a prime objective, because these underpinnings can serve as
the building blocks of the project. Usually financial institutions,
department stores, office buildings, and public buildings are
the anchor tenants or major assets in central business districts.
The existing industries and manufacturers of your industrial
areas are the assets to consider expanding or to use to attract
new, complementing businesses. It is said that 70 to 80 percent
of industrial growth comes from expansion of the local existing
industry. Develop a plan that will focus on this potential
drawing power. Buildings or districts that have historic or
architectural significance can be the tangible, quality worth
preserving. Simply put, "Accent the positive; eliminate the
negative . "

There is no such thing as "one best plan". Each community
will have different needs and objectives. We must recognize
that there are significant regional differences in Montana.

28

There are differences in attitudes, resources, organization
and administrative ability. Therefore, decide what is best
for your community, agree on what must be done, and do it.
The test of your plan will be in the results achieved.

If consultants or professional planners are used, never
delegate to them by default the power to set the community's values
and objectives, and be wary of those who will. The solutions
to problems incorporated into the plan of action must result
in demonstrable economic and social benefits to the community
which reflect the community's self image. Your total Community
Development strategy should be action-oriented rather than
plan-orien ted .

The comprehensive strategy to be incorporated in a total
community development plan must go far beyond a list of projects.
It must also set forth, define and set priorities for future
actions of the community. Finally, the strategy must include
a description of how diverse resources will be used and coordinated
and used is the most important part of the strategy, the basis
upon which the community can assess its investment needs and
identify all appropriate avenues of assistance.
BASIC ELEMENTS OF A DEVELOPMENT PROGRAM

Many Montana communities are familiar with the Overall
Economic Development Program (OEDP). The OEDP was a locally
initiated planning process designed to create employment oppor-
tunity, foster more stable and diversified local economies,
improve local conditions, and provide a mechanism for guiding
and coordinating the efforts of local individuals and organizations

29

concerned with the economic development of their area.

The OEDP document describes the area's overall economic
development program and charts the course for development
action. It examines the problems, needs and resources of the
area and sets forth the goals of the development program together
with the strategy devised to achieve these goals.
SCOPE OF THE OEDP

Although each area's development program will differ from
those of other areas, all successful development programs must
contain cer^^ain basic elements:

- fact gathering to assure that the area understands the
current development situation as a basis for decisions.

- Identification of potentials (such as resources or
location) that can be the basis for economic development.

- Establishment of goals and intermediate objectives to
point the direction of development activities, and upon
which to measure progress.

- Devising a strategy for developmen t--a logical plan
for reaching the area's goals and objectives.

- Provision of a detailed work program that proposes the
methods for implementing the development strategy and
pro j ec ts .

Details of these basic OEDP elements are explained in
a publication covering the outline and specific elements.
It is available from the Department of Commerce.

Regardless of whether or wOt your community decides to
follow established procedures for an OEDP, there are several

30

basic elements of needs assessment, analysis, strategy formula-
tion and program or project implementation which should be
followed .
ORGANIZATION

The Mayor should consider establishing a Steering Committee
to take the initiative and leadership in developing and continu-
ing the needs assessment analysis and continuing the action
program. Who should be involved? Community leaders in business,
labor, industry, agriculture, minority groups, the unemployed
or underemployed. The Steering Committee needs a Chairperson,
a Vice Chairperson to take over when the Chairperson is absent,
and a Secretary to record actions and decisions of the organiza-
tion in addition to issuing press releases.

for the first organizational meeting and for each meeting
thereafter, the Steering Committee should have an agenda and
stick to it; pick a time that is convenient; start on time;
and end on time. It is a good rule to make at least two deci-
sions for further action at each meeting, and to discuss the
agenda for the next meeting.

The Steering Committee can begin its community needs assess-
ment with a thorough examination of the community, its assets
and its liabilities. This should begin with an analysis of
the community's base data, including information on population,
employment by sector, housing stock, business inventory, utilities,
tax base and mill levies, schools and recreation, etc. (An
annotated bibliography of data sources is contained in the
Appendix.) If the community has a planning board, the planning
board president and any professional planning staff should

31

be consulted. Very often the planners will have a great deal
of the sought after information. The planners also may have
other community planning documents which the Steering Committee
should analyze before preparing their own plan. These other
planning documents may include:

1) A Comprehensive (Master) Plan for the community
and/or the county

2 ) Land Use Flan

3 ) Housing Plan

4) Zoning Ordinance

5) Parks Plan

6) Overall Economic Development Plan

7) Other Technical Studies and Surveys

The major focus of this analysis of existing plans and
studies should be to answer the following questions:

1) What do the existing plans tell us about the concerned
area?

2) Are there elements or ideas in the existing documents
which we should recognize as community goals and attempt
to incorporate into our plan for the concerned area?

3) Are the existing plans up-to-date?

A) Were the existing plans developed with public input

and par tic iation?
5) Have community goals changed since the existing documents

were publ ished?
Many Steering Committees ask the Mayor to furnish a list
of the community's needs and conduct a quick needs survey of

32

other community organizations, such as the chamber of commerce,
county government, school boards, senior citizens and representa-
tives of retail organizations and existing industry.

This information, when combined with the Steering Committee's
intimate knowledge of the community, should be analysed to
determine the relative importance of needs by considering:

Needs which affect the largest percentage of the

population and their social environment.

Needs which pose an immediate threat to the health

and welfare of indidivuals.

Needs which threaten the economy of the area.

Needs which are projected for the near future

(two or five years).

Needs which seem to relate direc^-ly to other needs.
Once the needs are identified, categorize them in the areas
of the social environment, economic environment, natural and
political environments.

The next very important step is to analyze candidly why
the needs exist: What has or has not been done, by whom or
which individuals, or organizations, to create the needs that
have been identified.
PUBLIC INFORMATION AND CITIZEN PARTICIPATION

The Steering Committee should develop written policy and
procedures to keep the public informed through the media or
reports published to solicit and encourage feedback from citizens.
In some instances the town hall meeting has been most effective,
particularly if there is ample notice, a convenient time and

33

place, and the preliminary finds and analysis of the Steering
Committee are published well in advance so that citizens can
respond as well as suggest additional needs.
SURVEYS

There are several sample survey forms available from the
Department of Commerce to aid in identifying needs and targeting
your program. If you conduct formal surveys, publish the
results and again encourage feedback from citizens.
RESOURCE IDENTIFICATION AND ANALYSIS

Make a complete list of all tangible and intangible resources
which exist and are available to fulfill the needs identified.
This inventory of resources may identify needs which otherwise
may go unnoticed.
SET PRIORITIES AND ESTABLISH OBJECTIVES

(1) Decide what are the most crucial needs of the community
in their order of imports 9, emphasizing the greatest benefit

to residents.

(2) Identify obstacles which may block the successful
fulfillment of needs. Obstacles must be removed or neutralized
if your program is to succeed.

(3) Establish specific objectives; performance targets
against which achievement or success can later be measured.
State exactly how much is supposed to happen, to which group,
and when.

DEVELOP A WORK PLAN

Identify: the project (what's to be done); the objectives
of the project; who or what organization will be responsible

34

for each phase; what resources are needed, both tangible and
intangible; and set a realistic time for completion.
PROJECT IMPLEMENTATION

follow your work plan and stick to it until the job is
done or progress halts. If at first you don't succeed, again

identify and assess alternatives. Try to prevent participant

"burn out".

MONITORING AND EVALUATION

The Steering Committee should remain active, assuming
responsibility to monitor each project. On a predetermined
schedule, each project should be evaluated to make sure the
desired results are being achieved.
CONCLUSION

The basic elements outlined above are just that--basic!
Steering Commituee members will do a better job if they are
familiar with several approaches which may be used to develop
a total Community Development Plan.

You may want to contact the Department of Commerce, whose
staff can assist you: in obtaining sample development plans,
identifying community development "resource people" statewide,
and by providing ideas and suggestions which may assist your
planning efforts. Once you have developed your basic plan,
move on to the next chapter which focuses on implementing your
plan .

35

CHAPTER 7

HOW TO FINANCE COMMUNITY DEVELOPMENT

INTRODUCTION

"Before we can appraise our alternatives, I believe
we must dispell some of the false hopes that others
hold out for revitalizing our cities. Norman Krumholz
and Janice Cogger of the Cleveland City Planning
Commission have described a number of what they call
'delusions about central cities.'

First, it is a delusion to believe that the process
of declining population and falling jobs can be
reversed in the near future, and that the older in-
dustrial city can be restored to what it once was.

A second delusion is that the energy crisis will
cause a recen tral ization of the population. Thus we
will be using public transit and moving back to the
central ci ty .

Third, that local development incentives will have a
signficiant impact upon the location of business and
industry.

A fourth delusion is that fiscal distress in our
older cities is cyclical, brought on largely by
recession .

And a final delusion about central cities is the
expectation that the federal government is going
to bail the older cities out of all their difficulties."

We begin this chapter with the above quotation to dispell
some common community development myths. The quotation reflects
the experience of community development specialists who have
matured in this nation's older urban centers and have become
more realistic, perhaps cynical, about revitalizing our cities.
While many Montana planners may not concur with all of the
author's observations, "the expectation that the federal govern-
ment is going to bail the older cities out of all their dif-
ficulties," is indeed a delusion. This is not to say the federal
government has not been an active participation in solving

37

our revi tal ization problems; but the intent of the author's
comment and the advice offered in this guidebook is that self-
help rather than aid from the outside should be the emphasis
of any redevelopment or economic development plan.

This chapter discusses four categories of financial tools
for community development: local government, state government,
federal government, and private sector financing. The premise
that local financing tools ought to be considered first is
important if community development plans and specific develop-
ment projects are to be implemented. Local, state, and federal
financing is presented in that order because it pragmatically
reflects the way things usually happen. Private financing
is discussed last not because it is least important, but because
it needs to be emphasized as the final determinent of success.
No matter how good a plan appears in print, the true test of
its worth will be the level of private financial commitment
leveraged .

Leverage is a term that will be used throughout this chapter
Leverage is defined as "the use of supplementary non-equity
capital (as senior securities) or borrowed money to increase
the returns on equity; also: the resultant economic advantage."
The objective of this chapter is in part to suggest ways in
which limited public monies may be leveraged into substantial
private investment. Private investment which will result in
jobs, an improved and expanded tax base, and more livable com-
munities.

38

As ecologis t-philosopher Garret Hardins states: "You
can never do just one thing." So it is in developing the full
range and use of financing tools available to Montana communities.
Don't be content to do just one thing; learn to use financing
tools in combination to accomplish goals. In one Montana com-
munity five different sources of financing, involving federal,
state, local and private funds were used to put one development
project together. This financing approach is called "packaging."
Be willing to be daring and innovative, develop the skillful
use and understanding of how financing techniques can make
things happen. Consider packaging financing sources. Just
as there is no one best plan, there is no "one best" financing
tool. Use this chapter as you would a cookbook where ingredients
are listed which will satisfy certain needs, but there are
no recipes. That part is left to the discretion and individual
needs and appetites of each community. Bon appetite!

LOCAL FINANCING TOOLS

INDUSTRIAL DEVELOPMENT BONDS

The legislature of the State of Montana has statutorily
authorized municipalities and counties of the state to become
actively involved in the industrial promotion of the state.
Rather than forcing these political entities to sit idly by
the sidelines until private enterprise initiates the steps
necessary for needed economic development, Title 90, Chapter
5, Part 1 of the Montana Code Annotated (MCA) provides that the

39

governing body may purchase the property necessary for an economic
development project; finance the sale of the purchase with
the issuance of Industrial Revenue Bonds and retire these bonds
with the income derived from the lease or sale of the develop-
ment pro j ec t .

There is practically no limit to the type of industrial
development projects the municipality or county may become
involved in by issuing these revenue bonds. "Project" is defined
by statute as any land, any building or other improvement and
all real and personal properties deemed necessary in connection
therewith which is suitable for use for commercial, manufacturing,
agricultural, or industrial enterprises; recreation or tourist
facilities; state and federal governmental facilities or medical
facilities. The reader should be aware that Congress is, as
of April 1982, considering legislation to severely limit the
use of tax exempt Industrial Revenue Bonds.

ECONOMIC DEVELOPMENT LEVY

Section 90-5-112, MCA, authorizes the city or county to
levy a tax for economic development purposes of up to one mill
upon the taxable value of all property in the county or munici-
pality; provided that the levy period may not exceed five years,
and a majority of the qualified voters of the county or munici-
pality must approve the levy.

The proceeds of this tax may be used to contract with
local development companies and other associations or organiz taions
capable of implementing the needed economic development and

40

may also be used for purchasing the land necessary for industrial
parks; constructing buildings to house manufacturing and proces-
sing operations; conducting preliminary feasibility studies
and generally promoting economic development in a particular
area. The funds may not be used as a loan to assist an industry's
operation, nor may the funds be used to pay the salary of a
government employee. Section 90-5-112, MCA, authorizes the governing
body to combine the proceeds of this tax with bond proceeds
and finance the economic development project with both methods
of financing.
SPECIAL IMPROVEMENT DISTRICT (SID)

In Montana the Special Improvement District is by far
the most utilized financing tool. There are a surprising number
of communities that seldom use the statutory authorization
to create a SID .

SID's may be used to pay for all manner of public improvements
(e.g. streets, lighting, sewer), to aid in the prevention of
blight or to provide the public infrastructure to serve new
or expanded business and industry.

The creation of a Special Improvement District allows

a municipality to issue tax exempt bonds to pay for the cost

of public improvements, and to pay the principal and interest

due on those bonds over a period of up to 20 years. The money

to retire bonds sold is derived from assessments levied on

property in the SID. Assessments may be based on a front foot

basis, an area basis or a combination of both. (Assessments

for parking are difficult. You may want to contact a community

which has a parking commission or a private consultant. You may

need to carefully analyze your community's parking situation.)

41

The Special Assessment differs from a tax
in that it is levied against property that will receive relative
benefit from an improvement, whereas taxes are compulsory con-
tributions without any necessary relationship to benefits
received .

SID's may be used alone or in combination with revenue
bonds, G. 0. Bonds, private contributions, or state and federal
funds. Tax increment may be used to pay principal and interest
on SID bonds sold to pay for eligible urban renewal project
costs. The advantages of using SID's are that public improvements
may be provided when they are needed, and paid for over a 20-year
period; interest rates are lower than market because of the
tax exempt status of bonds; only those properties receiving
benefit are assessed at the most equitable basis; and it is
the simplest, quickest way of providing needed public improvement.

Improvement Districts are covered in the Montana Code
Annotated, Title 7, Chapter 12. The Montana League of Cities
and Towns has published a Special Improvement District Guidebook
complete with sample resolutions. This is a tested step by
step procedural manual that can save time and costly mistakes.
The Montana Department of Commerce will also provide counseling
if needed. This is a most useful and flexible tool.

SID's and Rural Improvement Districts (RID) have been
effectively used to provide sewer, water, paving, curbs, gutters
and sidewalks for industrial parks throughout Montana. An SID
for parking has been used in Helena to back parking revenue
bonds sold to provide adequate off-street parking. SID's and

42

RID's have been used to supplement EDA and FmHA grants to provide
improvements in rural areas. Bonds are marketable and brokerage
firms in Montana are interested buyers. Explore how an SID
or RID may be combined with gas tax funds, urban systems funds
and/or revenue sharing funds to build needed improvements.
Advise property owners as to how they will benefit from improved
property values resulting from paved streets, sewer and water,
curbs, gutters, and sidewalks. Don't wait for federal funds
or grants to provide community needs if property owners are
able to pay assessments. HUD CD Block grants have been used
in some communities to pay totally or supplement SID assessments
against property owned by low income persons. Be innovative,
and use the SID, RID tools to satisfy your community's needs.

Be aware that there are negative aspects to utilizing
the SID/RID approach. Assessments may not be paid on a timely

basis. Administrative costs are significant. Do consider the

SID approach.

GENERAL OBLIGATION BONDS

GO Bonds may be used to aid in the planning, undertaking,

or carrying out of an urban renewal project, (7-15-4302, MCA)

provided a majority of the qualified electors approve. Under

7_15_4218, MCA, sewer and water revenue bonds may also be used

to finance urban renewal project improvement.

URBAN RENEWAL BONDS AND REFUNDING BONDS

A municipality has the power to issue bonds to finance
urban renewal, including the payment of prinicpal and interest
upon any advances for surveys and plans, and to issue refunding

43

bonds for the payment of such bonds previously issued. Such
bonds shall be authorized by resolution or ordinance of the
local governing body and shall not pledge the general credit
of the municipality (7-15-'^301, MCA). Specifics related to
urban renewal bond authority are obtained in Chapter 7, Title
15, Part A3 of the Montana Code Annotated. Before Urban Renewal
Bonds may be issued, an Urban Renewal District needs to be
created and an urban renewal plan prepared.

TAX INCREMENT FINANCING

Tax Increment Financing (TIF) may only be used in conjunc-
tion with the implementation of an urban renewal plan and project
(See 7-15-^2, MCA). The local governing body must declare that
urban renewal is necessary and in the public interest and that
"blight" exists in an area or areas of the municipality.

Tax Increment Financing authority was added to the Montana
Urban Renewal Law in 197^ to address a need that could no longer
be met with Federal Urban Renewal Loans and grants. The Montana
legislature recognized that need and has been willing to amend
the TIF financing provision several times to assure that it
remains a workable tool.

The principal of TIF is that the redevelopment project
is financed through the use of new tax dollars generated as
a result of increased private investment stimulated by a redevelop-
ment project. It assumes that the existence of "blight" has
a detrimental effect on private investment in any area. Blight
occurs when private investment is lacking: properties become
run down, needed public improvements are neglected, merchants

kk

and affluent residents move out, rents drop and property values
(the basis on which taxes are levied^ stagnate or declines.
The desire to shore up and maintain the tax base then, is an
objective which concerns all levying agencies, school boards,
state, county and local government. :.

It can be assumed that if nothing is done in a blighted
area levying agencies will derive fewer and fewer tax dollars
each year the tax base erodes. This loss of income will require
either a reduction in services and expenditures or an increase
in the mill rate, or number of mills levied, or both. It must
also be assumed that if a community adopts a redevelopment
plan which will instill developer-investor confidence, the
existing tax base will be maintained at least at present levels
and improved measurably over the term of the project. The
Tax Increment financed urban renewal project then, is intended
to assure that all levying agencies (schools, state, county,
city) may continue to count on a stable "original" base value
of private property on which to levy taxes. Any increase in
the fair market value of property above the "original base"
value, or the increment, will generate new tax dollars; tax
dollars that in all probability would not exist were it not
for an urban renewal project. Tax Increment is "the tax collections
realized from extending the tax levies, expressed in mills,
of all taxing bodies in which the urban renewal area or a part
thereof is located against the incremental taxable value."
(7-15-^283(4), MCA)

"The tax increment, (the new tax dollar) if any, received

A5

in each year from the levy of the combined mill rates of all
the affected taxing bodies against the incremental taxable
value within the urban renewal area shall be paid into a special
fund held by the treasurer of the municipality and used as
provided (by law). ." ( 7-15- A286 ( 2 ) , MCA)

The tax increments may be used to pay the following costs
of, or incurred in connection with, an urban renewal project:

1. land acquisition;

demolition and removal of structures;
relocation of occupants; and

the acquisition, construction and improvement of streets,
curbs, gutters, sidewalks, pedestrian malls, alleys,
parking and off-street parking facilities, sewers,
waterlines, waterways, public buildings, and other
public improvements . . . items of personal property
to be usev. in connection with improvements for which
the foregoing costs may be incurred (7-15-'4288, MCA)
Also costs incurred in exercising any of the powers
set forth in 7-15-4233, MCA.

Tax increment may be pledged for the payment of revenue
bonds, issued for urban renewal projects or of general obligation
bonds, revenue bonds, or special assessment bonds issued to
pay urban renewal costs. (7-1^-4290, MCA) All of the above-
mentioned bonds are tax exempt, i.e. the interest earned by
the bond buyer, cannot be taxed as income therefore a lower
than market rate of interest is paid by the seller (municipality).

See Figure 1, The Tax Increment Financing Concept, on
page A7. Note the "increment" and the probable consequences
of not adopting a plan.

OTHER LOCAL FINANCING TOOLS
Community development activites can also be financed,
in part by utilizing:

A6

I )

r\ rr\Kr\ Kf\ rr^\ u/» vA ^.

H7

THE TAX INCREMENT FINANCING CONCEPT

47

1. Parking Revenues

2. Sewer and Water Revenues

3. Planning Boards - Your planning board can be a useful
community development resource. Communities can levy
mills to support planning. (See 76-1-AOl, MCA)

4. Land Use Planning Funds - These funds are derived from
the Coal Severance Tax and are allocated to county govern-
ments. The funds can be used for community development
planning, grant applications, parking studies, and other
purposes. Contact your County Commissioners to see how
your County is utilizing these funds. (See 15-35-108,
MCA)

STATE FINANCING TOOLS

The State Historic Preservation Office (SHPO) under the
State Historical Society administers a U.S. Department of
Interior program which provides for matching grants for historic
surveys and for the cost of documenting historic properties
or landmarks. Contact the Montana Historical Society for com-
plete details.

Local lending institutions may take advantage of low cost
home mortgage financing available through the State Housing
Finance Agency's sale of tax exempt bonds to provide housing.

The State Department of Commerce coordinates and administers
some HUD Section 8 Housing Assistance programs, to provide
rental assistance for low/moderate income persons. As mentioned
earlier, the State Department of Commerce also provides a complete
range of technical assistance for housing and community develop-
ment.

The State Highway Department often provides technical
assistance and can assist with transportation planning. If
the project will involve urban systems or highways, call the
local highway engineer for advice and assistance or contact
the Montana State Highway Department Planning Division.

48

MONTANA COAL IMPACT FUNDS

The Montana legislature has statutorily set aside certain
portions of the revenue collected from the coal severance tax
to assist local governmental bodies in areas of the state
affected oy the recent influx of people and industry resulting
from coal development. In areas where there is coal impact,
the governing body of the county, incorporated city or town,
school district or special improvement district are potentially
eligible for grants. Coal impact funds are available for the
construction of educational buildings, sewage and water system
improvements, and jail and fire department buildings. In addition,
the funds may be used to purchase street maintenance equipment,
sewage and water system maintenance equipment, education equipment
and furniture; law enforcement vehicles; and fire protection
vehicles. Lastly, the funds may be used to provide clerical,
health, planning and law and order services. The Coal Board
can help the local officials determine whether or not their
community is presently impacted by coal development or may
be impacted by coal development in the future and can explain
grant eligibility requirements.

MONTANA'S "SMAL^ CITIES" COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
Montana has elected to assume administration of "Small

Cities" Community Development Block Grant (CDBG) program from

HUD beginning with federal FY 82 funds.

The CDBG "Small Cities" program was established by the

Housing and Community Act of 1977 and has been administered

by the U.S. Department of Housing and Urban Development (HUD).

49

The program was designed to help communities of less than 50,000

population which have the greatest community development needs,

with particular emphasis on assisting persons of low and moderate

incomes . Activities funded frequently included rehabilitation

of substandard housing; construction or repair of neighborhood

facilities, water and sewer systems, and streets; and acquisition

of property for development.

The new law requires that the state's program for allocating

CDBG funds:

"give maximum feasible priority to activities which
will benefit low and moderate income families or
aid in the prevention of elimination of slums or
blight; the use of funds may also include activities
which are designed to meet other community develop-
ment needs having a particular urgency because existing
conditions pose a serious and immediate threat to
to the health or welfare of the community where other
financial resources are not available to meet such
needs . "

The Department of Commerce will furnish complete regulations

and application forms. Eligible applicants are limited to general

purpose local governments (counties and incorporated cities

and towns). All Montana counties, cities and towns are eligible

to apply, with the exception of Billings and Great Falls.

Applicants may submit only one application for either
a single purpose or comprehensive grant per fiscal year, and
the applicant should clearly indicate which type of grant it
is choosing. For a single purpose grant, a project must address
a community development need in one of the following general
areas: Economic Development, Housing, or Public Faciities.

A comprehensive project must:

1. Address a substantial portion of the identified

50

community development needs within a defined concentrated
area or areas ;

2. Involve two or more activities that bear a relationship
to each other (excluding administration, planning

and management), and in terms wf support or necessity,
must be carried out in a coordinated manner;

3. Have a measurable, beneficial impact within a reasonable
period of t ime ;

A. Be developed through an assessment of the applicant's
community development, housing, public facility and
economic needs .

Each type of grant will have a different grant ceiling, as

follows :

Type
Single purpose
Single-year comprehensive
Multi-year comprehensive

Ceiling

$400,000

$750,000

$500,000 per year for a
maximum of three years

Each applicant must prepare an assessment of community
needs and propose a strategy for responding to them. The
s trategy mus t :

1. Establish prioriites for the identified needs;

2. Include a list of activities the community will
undertake to ad^^ress them; and,

3. Describe how local efforts will contribute to the
overall strategy.

A brief summary of the needs and strategy shall be submitted

51

with the application. The summary must include a description
of the process used to identify and select the needs, priorities,
and activities, including efforts to encourage citizen partici-
pation.

The Department of Commerce and the Montana League of Cities
and Towns can provide information and technical assistance
to improve the community's changes for funding.

TAX INCENTIVES

Manufacturing industries may qualify for significant re-
ductions in property taxes after approval by local governing
bodies. Individuals and corporations may claim a tax credit
against property taxes paid on business inventories provided
no deduction was claimed for the business inventory tax. Business
inventories will be exempt from property taxation for tax years
beginning after December 31, 1982.

There are numerous other tax incentives explained in the
publication "Montana Taxes and Industrial Tax Incentives",
distributed by the Department of Commerce. Community leaders
should also be aware of the substantial investment credits
and rapid depreciation allowances for older and/or certified
historic structures which are allowed by the federal ECONOMIC
RECOVERY TAX ACT OF 1981. Tax incentives when combined with
limited local government assistance, can make an otherwise
financially unfeasible private project viable.

52

FEDERAL FINANCING TOOLS

URBAN DEVELOPMENT ACTION GRANTS

The purpose of Urban Development Action Grants (UDAG)
is to assist distressed cities and urban counties which require
public and private investment in order to strengthen their
economic, employment, and tax base. The program is intended
to help revitalize cities and urban counties experiencing a
combination of the following characteristics; loss of population
and jobs; stagnating or declining tax bases; high percentages
of poverty; low per capita income change; high unemployemn t ;
and deteriorating housing.

HUD allocates grant funds throughout the year to ensure
that assistance is available for each calendar quarter. There
is special set aside funds for "small cities" which meet "dis-
tressed community" criteria and are determined eligible by HUD.
There are three types of action grant projects:

1. "Commercial Projects" - are those which are predominantly
retail, office or commercial in nature and which are
located in primarily commercial areas such as a central
business district;

2. "Industrial Projects" - are those which are predominantly
warehousing, manufacturing or industrial in nature,
which are located in primarily industrial areas such

as an industrial park or a central business district;

and ,

3. "Neighborhood Projects" - are those which include

53

industrial, commercial and/or residential action
grant funded activities located in a residential area
or are predominantly residential in nature.
No project will be considered for funding unless it contains
a firm private commitment and includes a statement that "but
for" the receipt of the action grant funds requested, the project
would not be built. Each project considered for selection
must have a leveraging ratio of at least 2.5 to 1.0. The higher
the leverage ratio the more competitive the application will
be. HUD will also consider: the impact of the proposed project
on the employment base; the impact of the project on the fiscal
base of the community; the impact of the proposed project on
the physical conditions of the community; the impact of the
proposed project on the economic conditions of the community;
the demonstrated performance of the applicant in carrying out
housing and community development programs; extent of relocation
caused by the project; extent of citizen participation, extent
of minority business participation; extent of assistance to
be made available by the state; and the extent of participation
by other public entities.

UDAG works! The City of Missoula has succeeded in funding
a new $3.2 million office building and a 200-room Sheraton
Hotel. The City of Great Falls funded a warehouse expansion
and a new office building. UDAG is not just for the larger
Montana cities or just for large complicated development projects
Many small Montana towns are eligible for UDAG grants. In
some parts of the country, UDAG grants have helped finance

54

small business projects -- such as a new Dairy Queen. If your
project will not work any other way and the private sector
is willing and able "but for" an action grant, call the Department
of Commerce for more information on UDAG.

OTHER FEDERAL PROGRAMS

The following agenc ies / programs may also be useful:

1. The Small Business Administration - Provides loans
to local development companies.

2. Economic Development Administration - This agency
administers several programs.

3. Federal Revenue Sharing Funds - These funds are dis-
tributed to local governments on a formula basis.
Generally, revenue sharing funds should be considered
for "infrastructure" improvements which are necessary
to support community development. Infrastructure
improvements include: roads, sewer and water systems,
utilities, street lights, sidewalks, etc. Revenue
sharing monies should not be used for maintenance

and operating costs.

PRIVATE SECTOR FINANCING TOOLS AND INCENTIVES

The true test of any total community development plan
will be whether or not the plan stimulates private investment
which results in jobs, an improved tax base and a more humane
environment. This statement has been reiterated throughout
this text because it is important. Planners, community leaders

55

and elected officials must realize that investor-developers
are motivated by profit, reasonably secure investment, and
the opportunity for investment growth. We should perhaps add
a fifth delusion to the list at the beginning of this chapter--
that a businessman's social conscience will prevail over his
or her desire for profit, and thus compel them to invest in
our communities.

Redevelopment and economic development plans must not
just treat the symptoms of blight, inadequate housing, unemploy-
ment and a stagnant tax base, but attack the cause--lack of profit
incentive. Federal and state programs are now focusing on
leveraging private dollars with limited grants; local government
too, ought to channel its efforts in that direction. In order
to do so, local government needs to understand what profit incen-
tives are available to businesses in addition to: low interest
loans; grants; good planning; adequate public services and
off-street parking; long-term financing; technical assistance;
a local development company; local government's interest in
viability of businesses; and tax incentives and reasonably
priced 1 and .

The Montana Urban Renewal Law allows local government
to acquire private property land and improvements and resell
to private developers at fair market value for purposes consistent
with the plan. For example, assume that there is a need and
market for a hotel/motel convention complex in the community
and investor /developers interested in building it. Assume
also that there are one or two blocks in the urban renewal

56

project area occupied by substandard, functionally obsolete,
low-value buildings that have neither architectual nor historical
significance. The site is acceptable to the inves tor /developers ,
but the cost of assembling the land and improvements, relocating
the building's occupants, demolishing the structures, improving
the site and providing new utilities, will result in cleared,
ready- to-develop land costs exceeding $15.00 per square foot --
an uneconomical development cost. An additional problem is
that one of the 15 property owners, in the proposed project
area, will only sell his property for five times the current
market value.

The investor/developers economic feasibility studies indicate
the project will support a land cost of no more than $5.00
per square foot and there is a parcel of land in an irrigated
hay field just north of town that could be purchased for $2.00
per square foot plus the cost of utilties. The city, however,
wants the project to be built in the urban renewal area and
so does the developer i f the land can be purchased for $5.00
per square foot.

If the urban renewal plan land use element permits a hotel/
motel convention center in the area and/or even addresses the
needs for one as an objective of the plan, the city or agency
may acquire the land at a fair market value (just compensation)
exercising eminent domain if necessary, pay the cost of relocating
occupants, building demolition and site improvements using tax
increment or other financing. The city may then sell the cleared
land to the developer for $5.00 per square foot, assuming that
it fair market value for reuse in accordance with the plan.

57

The $10.00 per square foot loss on the transaction is
the land write down, an urban renewal project cost that may
be paid for from tax increment which will be generated through
taxes paid on the hotel.

The land write down concept is one of the urban renewal's
best tools .

58

CHAPTER 8

LAND MARKETING AND COMMUNITY PROMOTION
ATTRACTING PRIVATE INVESTMENT

LAND MARKETING

The ability of Community Local Development Corporation
( LDC ) to dispose of land and buildings or sites in an industrial
park, to an investor /developer or business who will develop
the land to its highest and best use, is the principal goal
of many plans, and its measure for success. Land marketing
is a function that requires the skills of persons knowledgeable
in real estate sales techniques and requirements and is not
to be left to amateurs. If an agency or LDC does not have
experienced staff, it should consider contracting for the services
of a professional realtor and/or real estate investment counselor.

The experienced staff or the professional realtors' role
is to identify and eliminate as much as is feasibly possible,
detriments to land disposition and to magnify the advantages
of acquiring commercial land to the prospective investor/
developer.

Basic principles to guide disposition are:

1. fair value must be paid;

2. the redeveloper must agree to conform to the land
use plan, start and complete the proposed develop-
ment on time, submit evidence of interim and take
out financing and demonstrate the legal and the
financial ability to perform; and,

3. transactions for land and/or buildings must hold
up under public scrutiny.

PROMOTION

Ask any successful realtor, the best way to promote a
sale and he or she will outline some basic considerations:

60

1. have a good appraisal supported by market comparables
to justify the asking;

2. sell location, location, location - the three most
important considerations for selecting a site for
a business investment;

3. have a clear description of the property and list
assets and incentives for development;

4. be able to answer a prospect's objections with facts;

5. be willing to assist the client in securing the best
possible financing; and,

6. make sure that the responsibilities of the seller
and buyer are understood and in writing.

All too often, promotional efforts are geared to attracting
out-of-state inves tor /developers , placing ads in the Wall Street
Journal, saying "y'all come to the Big Sky Country where the
fishin' and huntin' is good" when in reality the best prospects
for investment in the community are the business investors,
the small manufacturers, the merchants, and residents who
already live there. Concentrate on the expansion of local
industries and businesses. For example, by doing a business
and retailing market study, you can identify "retail or shopper
leakage" to other communities. You may be able to find a way
to provide the "leaked" good or service in your own community.
Finding ways to expand existing business should be the corner-
stone of the public/private partnership in your community.

61

CHAPTER 9

SUMMARY

The following concepts are central to community development
and deserve reiteration:

1. Community Development must be a total process which

relates and addresses the concerns and needs of a
community's social, economic, political, and
natural environments. Accent and preserve the
positive elements, eliminate the negative elements.

2. A public private partnership -- based on trust,
mutual self-interest, and economic realities -- is
a foundation for effective community development.

3. Community Development (like all public and private
endeavors) must be planned to be most effective.
Planning must be based on general community goals
and objectives, realistic assumptions of what can

be accomplished, and economic and political realities.
Planning must include a real dialogue between the
public and private sector and must include public
participation. Planning is an ac tion process which
should result in the building of actual development
or development prospects.

A. Community Development should be locally financed to
the highest degree possible.

5. Creative financing and packaging of several funding
tools should be considered.

6. Federal and State Assistance is limited but available.
Such assistance should compliment -- not supplant

-- local efforts.

7. Local community development is an involved process,
based on people negotiating with people for mutual
benefit .

As was stated at the beginning of this publication, this

guidebook is a basic introduction to the community development

process. We've covered a lot of ground and discussed a wide

range of technical concepts and financing methods. The key

point is: Don't be overwhelmed by the information presented.

As in learning to walk, a total community development process

can be created if steps are taken one at a time.

63

APPENDIX

BIBLIOGRAPHY

Bernstein, Harry E. "The Suburbs vs. The Cities". New Jersey
MUNICIPALITIES Magazine, February 1979-

Catalog of Federal Domestic Assistance (Superintendent of

Documents, Government Printing Office, Washington, D.C.
20A02). Cost is approximately $18.00.

Catalog of Federal Loan Guarantee Programs (Id., 1977
is approximately $3.75.

Cost

"Community Development Digest," Community Development Services,
Inc., 399 National Press Building, Washington, D.C. 200A5.
(Bi-weekly, subscription $107.00 per year).

Department of Community Affairs, Research and Information
Systems Division, Economic Conditions in Montana
December, 1978.

Department of Housing and Urban Development, Office of Community
Planning and Development, Office of Evaluation, Guidelines
for Urban Renewal Land Disposition. (Superintendent of
Documents, United States Government Printing Office,
Washington, D.C. 20A02). Price is approximately $5.05.

Economic Development Administration, Bulletin No. 85-78,

Assistant Secretary's Instructions for Fiscal Year 1979.
12/1A/78-12/31/79.

Bulletin No. 30-78, Part II. The Comprehensive Economic

Development Strategy, Planning and Investment Process,
4/13/78-10/1/78.

Id . , Part I, Statement of Policy.

Federal Register, United States Government Printing House,
Washington, D.C. 20402, (Subscription $50.00).

Governor's Council of Economic Advisors, Annual Report and
Recommendations to the Governor. January, 1979.

Governor's office of Commerce and Small Buisness Development,
Proposed Montana Development Plan. January, 1979.

Levatino, Adrienne, M. Neighborhood Commermcial Rehabilitation.
NAHRO Operational Guide 1978. (NAHRO, 2600 Virginia
Avenue, N.W., Washington, D.C. 20037). Price approximately
$9.00.

65

Lindbloom, Carl G., Farrah, Morton. The Citizen's Guide to
Urban Renewal . Chandler Davis, 1968.

Loans to Local Development Companies, OPI-17, February, 1975.
(United States Small Business Administration, Washington,
D.C. 20^416) .

Mitchell, Richard G. "Tax Increment Financing: An Appraisal"
NAHRO Journal of Housing.

Montana Code Annotated, 1978.

Mon ana House Journal, 1959.

Montana League of Cities and Towns. Special Improvement District
Guidebook. (Montana League Office, 1728 9th Avenue, Helena
Montana 59601 ) .

NAHRO (National Association of Housing and Redevelopment

Officials). Journal of Housing Number 3, March, 1977.
3A:3 (Subscription and individual order of this and other
select writing available thiough: NAHRO Publication,
2600 Virginia Avenue N.W., Suite 404, Washington, D.C.
20037 ) /

National Trust for Historic Preservation. Guide to Federal

Programs . National Trust Bookstore, 740-748 Jackson Place
N.W., Washington, D.C. 20006.

Neighborhood Preservation: A Catalog of Local Programs.

(Superintendent of Documents, United States Government
Printing Office, Washington, D.C. 20402.

Practicing Law Institute, Under Direction of United States

Department of Commerce. The Local Economic Development
Corporation: Legal and Financial Guidelines, 1970.
(Superintendent of Documents, United States Government
Printing Office, Washington, D.C. 20402). Price is
approximately $2.00.

United States Department of Commerce, Economic Development

Administration. Guide for AREA Overall Economic Development
Program. May, 1977. (Economic Development Representative,
Economic Development Administration, Federal Building
and United States Courthouse, Helena, Montana 59601).

Richard Preston, C.I.D. Principles of Industrial Development.
TRT Publications Inc., Third Edition Revised, 1981.

Kenneth C. Wagner, Economic Development Manual, Univesity
Press of Mississippi for the Mississippi Research and
Development Center, Jackson, 1978.

66

Avrom Bendavid-Val "Linking Future with Past" Planning
for Local Economic Development (Working Draft) 1 97 9 .

Montana Department of Commerce, "Montana's Community

Development Block Grant Program," Draft, March 3, 1982

Dennis McKee, J. Michael Vieux, John Wilham, A Community
Development Manual, Kansas Department of Economic
Developmen., October 1977.

67

SOURCES OF SOCIAL AND ECONOMIC INFORMATION
prepared by

Western Analysis, Inc.

P.O. Box 287

Helena, MT 59624

(406) 443-3420

The following information sources may be helpful in assessing
your community needs. These statistical documents may help
you analyze how your community compares to communities of
similar size and economic structure. Some of the following
statistical sources may be helpful - or essential - in pro-
viding information necessary to apply for state or federal
gran ts .

68

AGRICULTURE

Montana Department of Agriculture,

Montana Agricultural Statistics

(Helena, Montana: Montana Department of Agriculture).

Published bi-annually.

Available from: Montana Department of Agriculture

Crop and Livestock Reporting Service
State Capitol Station
Helena, Montana 59620

Price: Free

COUNTY PROFILE

Montana Department of Administration,

County Profile

(Helena, Montana: Montana Department of Administration).

Published annually.

Available from: Montana Department of Administration

Research and Information Bureau
State Capital Station
Helena, Montana 59620

Price: $6.00

CRIME

Montana Board of Crime Control ,
Crime in Montana,
t'ublished annually.

Available from: Montana Department of Justice

Montana Board of Crime Control
State Capitol Station
Helena, Montana 59620

Price: Free

ECONOMICS (Income and Employment)

Montana Employment Security Division,

1 ) Montana Economic Indicators.
Published quarterly.

2) Montana Employment and Labor Force.

(Helena, Montana: Montana Employment Security Division).
Publ ished monthly.

Available from: Department of Labor and Industry

Employment Security Division
Research and Analysis Section
P.O. Box 1723
Helena, Montana 59524

Price: Free

69

Regional Economic Inforrnaticn System (REIS),
Employment and Income Statistics.
^'uDlished monthly.

Available from: Department of Labor and Industry

Employment Security Division
Research and Analysis Section
P.O. Box 1728
Helena, Montana 59624

Price: Free

EDUCATION

Office of Superintendent of Public Instruction,

Montana Education Directory

(Helena, Montana: Office of Superintendent of Public

Instruction) .
Published annually.

Available from: Office of Superintendent of Public

Instruction
Room 105

State Capital Building
Helena, Montana 59620

Price: Free

School District,

1 ) Budget and Application for Tax Levies.

Prepared annually for each school district by the County
Superintendent of Schools.

2) School Trustee's Annual Report.

Prepared annually for each school district.

Available from: a) County Superintendent of Schools

County Courthouse
(Name of County Seat)

b) Office of the Superintendent of
Public Instruction
Finance, Planning and Evaluation

Services
Room 105

State Capitol Building
Helena, Montana 59620
P'"ica: Minimal fee for photo-duplication

70

HEALTH AND VITAL STATISTICS

Montana Department of Health and Environmental Sciences,

Montana Vital Statistics

(Helena, Montana: Montana Department of Health and

Environmental Sciences).
Published annually.

Available from:

Price;

POPULATION

Department of Health and
Environmental Sciences
Bureau of Records and Statistics
State Capitol Station
Cogswell Building
Helena, Montana 59620
Free

U.S. Bureau of the Census,
1980 Census of Population.
Summary Tape Files 1-4, in computer printout form,

Available from:

Price

Population Projections,
Available from:

Price

PUBLIC EXPENDITURES

Department of Administration
Research and Information Bureau
State Capitol Station
Helena, Montana 59620
$100 per county for STF 1.
Price for STF 2-4 depends on
specific data.

Western Analysis, Inc.
P.O. Box 287
Helena, Montana 59624
Depends on amount of detail

Conmunity Services Administration,

Federal Outlays in Montana

(Washington, D.C. : Communi ty Services Administration]

Published annually.

Available from:

Price:

Community Services Administration

Faderal Inforr^'cion Exchange

Robin Building, Room 301

7981 Eastern Avenue

Silver Spring, Maryland 20910

Un'<nov/n

71

PUBLIC EXPENDITURES (continued)

Budget for (Name of City of Town).

Prepared annually by the city clerk of each incorporated

municipal ity.

City (or Town) Clerk's,

Annual Financial Statement to State Examiner.

Prepared annually by the city clerk of each i ncorporated

municipality.

Available from: a) City Clerk

City Hall
(Name of municipality)

b) Local Government Services
Division
Department of Administration
805 N. Main

Helena, Montana 59620
Price: Minimal fee for photo-duplication,

TAXATION

Montana Department of Revenue,

1 ) Montana Taxpayers Digest

(Helena, Montana: Montana Department of Revenue, 1975).

2) Report of the State Department of Revenue
(Helena, Montana: Montana Department of Revenue) .
Published bi-annually.

Available from: Montana Department of Revenue

Sam W. Mitchell Building
State Capitol Station
Helena, Montana 59620

Price: Free

Montana Tax Foundation,

1 ) Montana Property Taxation.
Published annually,

2) Tax Budget Guide.
Published annually.

3) Tax Mill Levies.

(Helena, Montana: Montana Tax Foundation).
Published annually.

Available from: Montana Tax Foundation

P.O. Box 4909
Helena, Montana 59604

Price: $15.00 oer volijme

72

WELFARE

Montana Department of Social Rehabilitation Services,

Statistical Report

(Helena, Montana: Montana Depart/nent of Social and

Rehabilitation Services).
Published monthly.

Available from: neoartment of Social and

Rehabilitation Services
Bureau of Statistics and Research
State Capitol Station
Helena, Montana 59620

Price: Free

73

MONTANA COMMUNITY DEVELOPMENT PROFESSIONALS

The following persons or organizations may be able to
provide suggestions, ideas, or answers to your community develop-
ment questions. They are a resource for information about
"hands-on-it" development techniques that have worked in their
communities. You may be able to develop a self help "idea
network" with these persons and organizations.

Janet Cornish
Butte-Silver Bow Urban

Revi tal ization Agency
Courthouse
Butte, MT 59701

Ed Stern

Community Development Director
414 East Callender
Livingston, MT 59047

Les Prentice, Director
John Coffee, Chairman
Missoula Redevelopment Agency
201 West Spruce
Missoula, MT 59802

Linda Douglas

Community Development Office

Town of Superior

Superior, MT 59872

Michael & Ruth Howard
Community Development Office
Town of St. Ignatius
St. Ignatius, MT 59865

Jean Morrison

Director of Community Development

P.O. Box 567

Plains, MT 59859

Terry Dimock

Community Development Office

Town of Shelby

Shelby, MT 59474

Gary Kent, Chairman
Thompson Falls Community

Development Corporation
P.O. Box 99
Thompson Falls, MT 59o73

Ed Gallagher, Director
Kalispell Redevelopment Agency
12 3rd Street East
Kalispell, MT 59901

Dick Thorson

Community Development Director

City of Dillon

125 North Idaho

Dillon, MT 59725

Manson Bailey, Jr.

Valley County Development Council

Box 832

Glasgow, MT 59230

Allen Bjergo

Bitterroot Resource Conservation

and Development District
SOS Office
Hamilton, MT 59840

74

Dave Sharpe

Community Development Specialist

Cooperative Extension

Linfield Hall

Montana State University

Bozeman, MT 59715

Dick King

Bear Paw Development Corp.

P.O. Box 15^9

Havre, MT 59501

Judie Tilman

Butte-Silver Bow Community

Agency
P.O. Box 588
Butte, MT 59702

Linda Jones

Northwest Montana Human

Resource Council
P.O. Box 1058
Kalispell, MT 59901

Gene Marcille

Poison Community Development

Agency
P.O. Box 758
Poison, MT 59860

Bruce Bullard

Human Resource Development

Council
Lewistown, MT 59^57

Montana Department of Commerce
Development Bureau
1424 9th Avenue
Helena, MT 59620

Local Planning Boards

and Professional Planners

(Check with your city, town

or county government officials
Most planners have community
development expertise.)

Montana Assocation of Planners
Nick Kaufman, President
c/o Sorenson and Company
P.O. Box 3A18
Missoula, MT 59806

75

MONTANA COMMUNITY DEVELOPMENT AND PLANNING CONSULTANTS

Listed below are some private community development and
planning consultants who are generally available for community
development planning and project implementation. This list
is for information purposes only and inclusion does not constitute
endorsement by the Department of Commerce. Before hiring a
consultant, be sure that you understand the roles and responsi-
bilities of contractor-consultant relationships. The Department
of Commerce can provide you with information on utilizing con-
sultants. (Any consultant who was inadvertantly left off this
list or new firms should contact the Montana Department of
Commerce for inclusion in future printings of this document.)

Ms. Lisa Anderson, Planner
31 D i vision
Helena, MT 59601

Bob Peccia & Associates
810 Hialeah Court
Helena, MT 59601

Johnson-Graham Associates

John A. Eisen, Planning Director

6A4 Grand Avenue

Billings, MT 59101

Morrison & Maierle, Inc.
Harold Eagle, Planner
910 Helena Avenue
Helena, MT 59601

Mountain West, Inc.
512 North 29th Street
Billings, MT 59101

Rich Mayfield Associates

Bridger Center

103 Commercial Drive

P.O. Box 5715

Bozeman, MT 59715

Carlo Porteen

904 11th Avenue North

Glasgow, MT 59230

Clete Daily

52A West Lawrence

Helena, MT 59601

Tom Eggensperger

HKM

Airport Industrial Park

Billings, MT 59101

Gary Hill
Flathead APO
723 5th Avenue East
Kalispell, MT 59901

Randall Thoreson
Box 1503
Belgrade, MT 59714

Ms. Thelma Taylor
S.W. 640 Taybo Lane
Hamilton, MT 59840

76

Cumin & Associates
Box 20762
Billings, MT 59102

Joe A . Shouse

35 E. Mendenhall, Suite 200

Bozeman, MT 59715

Sorenson & Company
P.O. Box 3418
Missoula, MT 59806
Nicholas P. Kaufman,
Land Use Consultant

Jim E. Richard

P.O. Box 820

East Helena, MT 59635

Stan Steadman
Route 1, Box 7
Huntley, MT 59037

Jim Boyer

308 Power Block Building

Helena, MT 59601

Ann Mulroney
700 Power
Helena, MT 59601

Bruce Bugbee

111 North Higgins Avenue

Missoula, MT 59801

Nancy Fishering
Route 2, Box 2334

Sidney, MT 59270

Kent L. Mollohan
703 Breckenridge
Helena, MT 59601

Lawrence Gallagher
Suite 1

Professional Building
330 Fuller Avenue
Helena, MT 59601

Mike Halligan
Halligan & Associates
435 University Avenue
Missoula, MT 59801

James L. Linderholm
Plains Engineering
1413 Main
Miles City, MT 59301

Wirth Associates
1600 Poly Drive
Billings, MT 59102

Bob Braico
Hydrome tries
2727 Airport Road
Helena, MT 59601

Dave Fuller

ECO Northwest Ltd.

Downtown Professional Center

314 N. Last Chance Gulch

P.O. Box 4124

Helena, MT 59601

Rusty Rokita
Rokita and Associates
8 West Third Street
Hardin, MT 59034

John Fitzpatrick
Western Analysis
34 W. 6th Ave.
Helena, MT 59601

77

MONTANA

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